The Stark Law vs. the Anti-Kickback Statute: Key Differences That Impact Your Business

Healthcare transactions often involve two of the most significant federal fraud and abuse laws: the physician self-referral law, commonly known as the Stark Law, and the Anti-Kickback Statute (“AKS”). Both regulate financial relationships in healthcare, both carry serious penalties for violations, and both frequently arise in the same deals. But they operate differently, and confusing them can leave organizations exposed.

Executives, investors, operators, and compliance officers need to understand the distinctions between these statutes, how they interact, and why compliance with one does not guarantee compliance with the other.

The Stark Law at a Glance

The Stark Law prohibits physicians from referring Medicare patients for certain designated health services (“DHS”) to entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. DHS includes services such as clinical lab tests, physical therapy, radiology, and inpatient and outpatient hospital services.

The Stark Law is a civil statute that imposes strict liability. That means regulators do not need to prove intent. If an arrangement violates the statute, liability follows, regardless of whether the parties meant to break the law. Penalties include denial of payment, repayment of claims, civil monetary penalties, and potential exclusion from Medicare and Medicaid.

The Anti-Kickback Statute at a Glance

The AKS, by contrast, makes it a crime to knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward referrals for services covered by federal healthcare programs. Unlike the Stark Law, the AKS requires intent, though prosecutors can establish liability if even one purpose of the arrangement was to generate referrals.

The AKS carries both civil and criminal penalties, including fines, imprisonment, treble damages under the False Claims Act, and exclusion from federal healthcare programs.

Key Differences Between Stark and AKS

Although both statutes regulate financial relationships, they differ in several important ways:

• Scope: The Stark Law applies only to physician referrals for DHS under Medicare. The AKS applies to anyone, not just physicians, and covers any item or service reimbursable by federal healthcare programs.
• Standard of Liability: The Stark Law imposes strict liability. The AKS requires intent, though prosecutors interpret intent broadly.
• Protections: The Stark Law includes statutory and regulatory exceptions. The AKS provides regulatory safe harbors. Both require strict compliance with conditions.
• Penalties: The Stark Law is civil only, while the AKS carries both civil and criminal penalties.

How the Laws Overlap in Practice

In many transactions, both laws apply. For example, a physician compensation arrangement could raise Stark issues if it involves DHS referrals, and at the same time raise AKS concerns if regulators believe compensation was structured to influence referrals. Compliance officers must evaluate agreements under both frameworks.

Executives and investors cannot assume that satisfying a Stark exception will protect a deal from AKS scrutiny. Regulators frequently pursue cases under both statutes, and violations under one often support investigations under the other.

Practical Considerations for Stakeholders

For healthcare stakeholders, the practical takeaway is clear. Executives should ensure physician compensation models meet both Stark exceptions and AKS safe harbors where possible. Investors should review transactions with both statutes in mind during diligence. Operators should align daily business practices with written contracts and compliance requirements. Compliance officers should design programs that test arrangements under both Stark and AKS to identify and correct weaknesses before regulators intervene.

Conclusion

The Stark Law and the Anti-Kickback Statute remain cornerstones of healthcare regulation. They overlap in important ways, but they operate differently, and each creates unique risks. Organizations that confuse them, or assume compliance with one covers the other, place themselves in jeopardy. By understanding both laws and building them into strategy and operations, executives, investors, operators, and compliance officers can reduce risk, strengthen compliance, and position their organizations for long-term success.

This post is for informational purposes only and does not constitute legal advice. For guidance tailored to your organization, contact Mooradian Law at info@mooradian.law or (734) 219-4890.